tax return

[littleacre]

could anyone give some advice on income tax and stock. my accountant advises me that the stock i have is not like owning a tractor or piece of kit ie it is tax deductable over a term but my suckler cows i own are not tax deductable , but my way of thinking is they are because they are really tools of our trade am i thinking down the wrong lines ???

[ann]

Afraid so, you will need to give a valuation each year.

with the price of dexters being all over the place I'd go for the lowest end, if you make more when you sell them, they still get their pound of flesh.

There are 3 things certain in this life birth death and the dreaded tax man

[Duncan MacIntyre]

I think you can opt for livestock to be valued on a "herd basis" and it does not require to be valued from year to year, but presumably there will be a tally up at the cessation of trading. Our accountant does that with our Dexters which trade as a partnership separate from our Vets business and our other interests. Accountants not generally dealing with farming matters may not be aware of this.

Burnside Dexters is also registered for VAT despite having a low turnover far below the compulsory threshold.

Duncan

[cairnhill]

Duncan is correct that most people set up a "herd basis" account and this allows you to treat the herd as a fixed asset. However as we know it is not fixed because the animals in the herd die or are sold or new replacements are grown or purchased, so the inland revenue has created a list of rules that allow you or your accountant to control the herd as a fixed asset. The inland revenue has some good examples of how it is implemented:

http://www.hmrc.gov.uk/manuals/bimmanual/bim55500.htm

[littleacre]

yes it all gets a bit more involved when you try and do it all above board i still think its a problem in that the dexters vary so much in price that its difficult to value a herd unlike a more commercial cow its taken on market value at the time of valuation . with the current econic climate i can see dexter prices varying even more as some people who keep them fall into unable to affoed fodder etc and they will be sold for nxt to nothing likewise people not being able to afford the dexter beef the trouble is dexters do not command a fair price at our local markets so how to value the herd is beond me i could quite easily buy a cow at say £400 take her straight to market and not get half that down here in essex i am considering adding a few redpolls into my herd s they seem more sought after by our local butchers and slaughter house

[Jac]

how to value the herd is beond me i could quite easily buy a cow at say £400 take her straight to market and not get half that down here in essex

I don't think it quite works like that from what I can gather valuation is based on the premise that the market is there i.e. there is a 'willing buyer'.